Renault has become the latest automotive industry player to unveil plans to penetrate the Chinese market.

The firm says it is establishing a joint venture with Dongfeng Motor Co that would be capable of producing 300,000 cars each year.

The joint venture is being held up as another indication of China's potentially huge demand, with Renault saying it is part of a wider growth strategy.

With the plant in operation by 2006, Renault has become the latest in a string of firms to announce plans to establish themselves in the market.

General Motors and Volkswagen, have both recently detailed plans for multi-billion dollar investments in the country, which has already experienced sales growth of 75 per cent in the last year.

GM is planning to raise its Chinese production from 530,000 now to 1.3 million in 2007, and will launch 20 new and upgrade offerings in the next three years.

Capacity at its flagship Shanghai facility will more than double from 200,000 to 450,000.